EXHIBIT 10.63
AGREEMENT RESPECTING A TERM LOAN AND OTHER CREDIT FACILITIES
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BETWEEN: BANK OF MONTREAL
OF THE FIRST PART
AND: POLYMERES XXXXX, LTEE-
XXXXX POLYMERS, LTD.
OF THE SECOND PART
TABLE OF CONTENTS
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Page
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ARTICLE 1 INTERPRETATION.......................................... 1
1.1 Definitions....................................... 1
1.2 Control........................................... 7
1.3 Headings and Table of Contents.................... 8
1.4 References........................................ 8
1.5 Singular and Plural; Gender....................... 8
1.6 Generally Accepted Accounting Principles.......... 8
ARTICLE 2 REPRESENTATIONS AND WARRANTIES.......................... 8
2.1 Representations and Warranties.................... 8
ARTICLE 3 THE TERM LOAN........................................... 11
3.1 Amount and Advance of the Term Loan............... 11
3.2 Repayment of the Term Loan........................ 12
3.3 Interest on the Term Loan......................... 12
3.4 Prepayment of the Term Loan....................... 12
ARTICLE 4 OTHER CREDIT FACILITIES................................. 13
4.1 Terms and Conditions.............................. 13
ARTICLE 5 FEES.................................................... 13
5.1 Commitment Fee.................................... 13
5.2 Application Fee................................... 14
ARTICLE 6 CHANGE IN CIRCUMSTANCES................................. 14
6.1 Increased Costs................................... 14
6.2 Illegality........................................ 15
(i)
ARTICLE 7 PAYMENTS, TAXES EXPENSES AND INDEMNITY................ 15
7.1 Time and Place of Payment...................... 15
7.2 Currency of Payment............................ 16
7.3 Setoff Etc..................................... 16
7.4 Taxes.......................................... 16
7.5 Evidence of Indebtedness - Notes............... 17
7.6 Expenses and Indemnity......................... 17
7.7 Survival of Indemnification Obligations........ 18
7.8 Application of Payments........................ 18
ARTICLE 8 PRE-DISBURSEMENT CONDITIONS........................... 18
8.1 Conditions Precedent to the initial Advance.... 18
8.2 Conditions Precedent to each Advance........... 20
8.3 Waiver......................................... 21
ARTICLE 9 CONVENANTS............................................ 21
9.1 Covenants of the Borrower...................... 21
ARTICLE 10 ENVIRONMENTAL MATTERS................................. 27
10.1 Definitions.................................... 27
10.2 Representations and Warranties................. 28
10.3 Covenants...................................... 28
10.4 Indemnity...................................... 30
10.5 Environmental Clean-Up......................... 31
ARTICLE 11 DEFAULT............................................... 32
11.1 Events of Default.............................. 32
11.2 Effect of a Default............................ 35
11.3 Remedies Cumulative; No Waiver................. 35
11.4 Setoff......................................... 36
11.5 Default Ipso Facto............................. 36
ARTICLE 12 NOTICE................................................ 36
12.1 Notices, Etc................................... 36
(ii)
ARTICLE 13 GOVERNING LAW; JURISDICTION; JUDGMENT
CURRENCY................................................... 38
13.1 Governing Law....................................... 38
13.2 Jurisdiction........................................ 38
13.3 Judgment Currency................................... 39
ARTICLE 14 SUCCESSORS AND ASSIGNS..................................... 40
14.1 Sale, Assignment, Transfer or Grant of Interest..... 40
14.2 Successors, and Assigns............................. 40
ARTICLE 15 MISCELLANEOUS.............................................. 41
15.1 Severability........................................ 41
15.2 Survival of Representations......................... 41
15.3 Amendments, Waivers, Etc............................ 41
15.4 Term of Agreement................................... 41
15.5 Execution in Counterparts........................... 42
15.6 Not an Adhesion Contract............................ 42
15.7 Conflict............................................ 42
15.8 New Legislation..................................... 42
15.9 Foreign Exchange Future Contracts................... 42
15.10 Death of Guarantor.................................. 43
15.11 Language............................................ 43
15.12 Formal Date......................................... 43
EXHIBIT A - DESCRIPTION OF LANDS
EXHIBIT B - DESCRIPTION OF MATERIAL CONTRACTS
(iii)
AGREEMENT RESPECTING A TERM LOAN AND OTHER CREDIT FACILITIES
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THIS AGREEMENT DATED AS OF THE 25TH DAY OF FEBRUARY 1994.
BETWEEN: BANK OF MONTREAL, a Canadian chartered bank, duly
incorporated under the laws of Canada, having its head
office and principal place of business at the City of
Montreal in the Province of Quebec, (the "LENDER")
OF THE FIRST PART
AND: POLYMERES XXXXX, LTEE - XXXXX POLYMERS, LTD., a company
duly incorporated under the laws of the Province of
Quebec, having its registered office and principal
place of business at the City of Baie d'Urfe in the
Province of Quebec, (the "BORROWER")
OF THE SECOND PART
ARTICLE 1
INTERPRETATION
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1.1 Definitions
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In this Agreement unless something in the subject-matter or the context
otherwise is inconsistent therewith:
1.1.1 "ACQUISITION AGREEMENT" - has the meaning ascribed to such term in
Section 8.1.3;
1.1.2 "ADVANCE" - means an advance of monies by the Lender to the Borrower
pursuant to the Term Loan provided for in Section 3.1.1 hereof or
pursuant to any other of the Credit Facilities;
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1.1.3 "AFFILIATE" - of a Person means any Person which, directly or
indirectly, controls or is controlled by or is under common control
with that Person;
1.1.4 "AGREEMENT" - means this agreement as it may be amended, supplemented,
restated or otherwise modified from time to time;
1.1.5 "BANKING DAY" - means a day on which banking institutions in Montreal;
Canada are open for business;
1.1.6 BORROWER" - has the meaning ascribed to such term in the preamble of
this Agreement, and includes any permitted successor or assignee of
POLYMERES XXXXX, LTEE - XXXXX POLYMERS, LTD.;
1.1.7 "BORROWING" - means a utilization by the Borrower of the Credit
Facilities whether by way of an Advance from the Lender or in any
other manner permitted from time to time by the Lender;
1.1.8 "BRANCH" - means the branch of the Lender located at 0000 XxxxxXxxxxx
Xxxxxxx, Xxxx of Pointe-Claire, Province of Quebec or such other
address in Canada as the Lender may advise the Borrower in writing;
1.1.9 "BUSINESS DAY" - means a Banking Day on which banking institutions in
New York City, U.S.A. are open for business;
1.1.10 "CANADIAN RATE" - means the annual rate of interest which is at any
time equal to the aggregate of (a) the fluctuating annual rate of
interest established from time to time by the Lender as the base it
will use at such time to determine rates of interest on CDollar loans
to customers in Canada and designated as its prime rate plus (b) one
and one-half of one percent (1 1/2%);
1.1.11 "CDOLLARS" and the symbol: "C$" each means lawful money of Canada;
1.1.12 "CREDIT FACILITIES" - means each of the credit facilities (including
the Term Loan) which the Lender will make available to the Borrower
pursuant to the Letter of Offer, as same may be increased, decreased,
renewed, restated or
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otherwise modified or replaced from time to time, together with any
other credit facilities which may be granted from time to time by the
Lender to the Borrower;
1.1.13. "EQUIVALENT AMOUNT" - means, on any date, the amount in CDollars or
USDollars, as the case may be, which would be obtained on the
conversion of an amount in USDollars into CDollars or CDollars into
USDollars, respectively, at the rate of exchange which is the noon
spot rate for purchase of USDollars with CDollars or CDollars with
USDollars, respectively, as reported by the Bank of Canada on such
date;
1.1.14 "EVENT OF DEFAULT" - means each of the events specified in Section
11.1 hereof;
1.1.15 "GUARANTOR" - has the meaning ascribed to such term in Section 11.1.5;
1.1.16 "LANDS" - means the property described in Exhibit A;
1.1.17 "LENDER" - has the meaning ascribed to such term in the preamble of
this Agreement and includes its successors and assigns;
1.1.18 "LETTER OF OFFER" - means collectively the Lender's letter dated
January 21, 1994 addressed to Xxxxxxx Xxxxxxxxxx and the term sheet
attached to it accepted by the said Xxxxxxx Xxxxxxxxxx on January 27,
1994 relating to the credit facilities offered by the Lender to the
Borrower in the aggregate principal amount of THREE MILLION THREE
HUNDRED THOUSAND CDOLLARS (C$3,300,000), as the said letter and the
said term sheet may have been heretofore or may be hereafter amended,
supplemented, replaced, renewed or otherwise modified from time to
time;
1.1.19 "LOAN" - at any given time means the aggregate principal amount of all
Borrowings outstanding at such time including, without limitation, the
face amount of all outstanding letters of guarantee and letters of
credit issued by the Lender for the account of the Borrower;
1.1.20 "MATERIAL CONTRACTS" - means the contracts referred to in Exhibit B;
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1.1.21 "NOTE" - means a demand promissory note of the Borrower payable to the
Lender, duly completed, executed and delivered by the Borrower
pursuant to a Borrowing under the Credit Facilities and "NOTES" means
each and every Note;
1.1.22 "PERSON" - includes any individual, firm, company, corporation,
government, governmental body, agency or instrumentality, association,
partnership, trust and joint venture;
1.1.23 "PERMITTED ENCUMBRANCES" means:
1.1.23.1 undetermined or inchoate liens and charges incidental to
construction, maintenance or operations which have not at
the time been filed or registered pursuant to law and any
liens and charges incidental to construction, maintenance or
operation which, although filed, relate to obligations not
overdue of the Borrower;
1.1.23.2 liens for taxes, rates, assessments and governmental charges
for the then current year; liens for taxes, rates,
assessments and governmental charges not at the time due or
delinquent; liens securing workers' compensation
assessments; and liens for taxes, rates, assessments and
governmental charges which are overdue but the validity of
which is being contested at the time in good faith or for
which security in form and amount acceptable to the Lender
has been delivered to the Lender;
1.1.23.3 cash, cheques or other financial instruments or governmental
obligations deposited in the ordinary course of business in
connection with contracts, bids, tenders or to secure
workers' compensation, unemployment insurance, surety or
appeal bonds, costs of litigation, when required by law,
public and statutory obligations, liens or claims incidental
to current construction, mechanics', warehousemen's
carriers' and other similar liens;
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1.1.23.4 easements, rights of way, restrictive covenants, covenants
in favour of governments or municipal authorities,
servitudes and other similar rights in land granted to or
reserved or taken by other persons which in the opinion of
Lender's counsel will not in the aggregate materially impair
the usefulness to the business of the Borrower of the
property affected;
1.1.23.5 title defects or irregularities of title which in the
opinion of the Lender's counsel are of a minor nature and in
the aggregate do not and will not materially impair or
materially adversely affect the security under the Security
Documents or the usefulness to the business of the Borrower
of the property affected;
1.1.23.6 purchase money liens; conditional sales agreements or other
title retention mortgage, charge, hypothec, pledge, lien or
other encumbrance on a property or asset created, issued or
assumed to secure the unpaid purchase price in respect of
such property or asset but not to exceed the aggregate
amount of one hundred thousand CDollars (C$100,000) in any
one fiscal year of the Borrower (collectively "TITLE
RETENTION INSTRUMENTS"); provided that in relation to any
given Title Retention Instrument such unpaid purchase price
does not exceed 80% of the original purchase price of such
property or asset; the whole subject to the provisions
hereof restricting the maximum aggregate amount of capital
expenditures which the Borrower may make in any fiscal year;
1.1.23.7 the lien of any judgment rendered or action, claim, lis
pendens or certificate of pending litigation, which is being
contested at the relevant time in good faith by the
Borrower; provided that the Borrower shall have either paid
into court or deposited with the Lender appropriate
collateral including without limitation a bond issued by a
licensed bonding company, in either case in an amount and of
a type reasonably acceptable to the Lender as adequate
therefor;
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1.1.23.8 zoning and building by-laws and ordinances, municipal
by-laws and regulations and other restrictions on the use
of real estate property provided same are being complied
with and which in the reasonable opinion of the Lender do
not and will not adversely affect the security under the
Security Documents or materially impair the usefulness to
the business of the Borrower of the property affected;
1.1.23.9 the reservations, limitations, provisos and conditions, if
any, in any original grants from the Crown of real estate
property and statutory exceptions to title;
1.1.23.10 hypothecs, privileges, liens and other charges resulting
from the Security Documents; and
1.1.23.11 such other liens as may be in favour of, or consented to
in writing by, the Lender;
1.1.24 "SECURITY DOCUMENTS" - means collectively all security from time to
time granted or to be granted in favour of the Lender, as security for
the fulfilment of any or all of the debts, liabilities and other
obligations, present and future, of the Borrower under or pursuant any
of the Credit Facilities including without limitation, the security
referred to in the Letter of Offer;
1.1.25 "SUBORDINATED INDEBTEDNESS" - means the aggregate loans and other
indebtedness owing by the Borrower to any Person, the repayment of
which has been fully and validly postponed and subordinated to the
repayment of all present and future loans and indebtedness of the
Borrower to the Lender to the satisfaction of the Lender;
1.1.26 "SUBSIDIARY" - of a Person means a company or corporation controlled
by that Person;
1.1.27 "TAX" - means all taxes, assessments, levies, imposts, stamp taxes,
duties, charges to tax, fees, deductions, withholdings and any
restrictions or
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conditions resulting in a charge imposed, levied, collected, withheld
or assessed as of the date of this Agreement or at any time in the
future, and all penalty, interest and other payments on or in respect
thereof;
1.1.28 "TERM LOAN" - has the meaning ascribed to such term in Section 3.1.1;
1.1.29 "USDOLLARS" - means the lawful money for the time being of the United
States of America in same day immediately available funds or, if such
funds are not available, the form of money of the United States of
America which is customarily used in the settlement of international
banking transactions on that day and "US$" has a corresponding
meaning;
1.1.30 "VOTING SHARES" - means the capital stock of any class or classes of a
corporation which carry voting rights under any circumstances provided
that, for the purposes hereof, shares which only carry the right to
vote conditionally on the happening of an event shall be considered
Voting Shares only upon the happening of such event and then only
while they retain the right to vote;
1.1.31 "WRITTEN" or "IN WRITING" shall include printing, typewriting, or any
electronic means of communication capable of being visibly reproduced
at the point of reception including telex or telegraph.
1.2 Control
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For the purposes of this Agreement, a Person controls a company or corporation
if that Person and/or one or more of its Subsidiaries beneficially owns,
directly or indirectly, an aggregate amount of the Voting Shares of such company
or corporation sufficient to enable it to elect a majority of the directors (or
other persons performing similar functions) of that company or corporation
regardless of the manner in which other Voting Shares are voted or has, through
the operation of any agreement or otherwise, the ability to elect or cause the
election of a majority of the directors (or other persons performing similar
functions), and the expressions "controlled by" and "under common control" shall
have correlative meanings.
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1.3 Headings and Table of Contents
------------------------------
The headings of Articles and Sections and the table of contents are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.4 References
----------
Unless the Context otherwise requires, all references to Sections, Articles and
Exhibits are to Sections, Articles and Exhibits in this Agreement.
1.5 Singular and Plural; Gender
---------------------------
In this Agreement, where the context admits, the singular includes the plural
and vice versa; and gender is used as a reference term only and applies with the
same effect whether the parties are of masculine or feminine gender, corporate
or other form.
1.6 Generally Accepted Accounting Principles
----------------------------------------
Each accounting term used in this Agreement shall be construed in accordance
with generally accepted accounting principles in Canada consistently applied,
unless something in the subject-matter or the context otherwise is inconsistent
therewith.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
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2.1 Representations and Warranties
------------------------------
The Borrower represents and warrants to the Lender that, on the date of
execution hereof and on the date of each Borrowing:
2.1.1 it is a company duly incorporated and organized and validly existing
under the laws of Canada, the jurisdiction of its incorporation, and
in good standing under the laws of Canada and the province of Quebec;
it is duly authorized to do business whether the nature of its
property or activities requires authorization, and it has the
corporate power and authority and all
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governmental licences, authorizations, consents, registrations and
approvals required to own and lease its properties and assets, to
conduct the business in which it is presently engaged and to enter
into, deliver and perform its obligations under this Agreement, its
Notes, the Letter of Offer and each of the Security Documents;
2.1.2 the execution, delivery and the performance by the Borrower of this
Agreement, its Notes, the Letter of Offer and the Security Documents
(i) has been duly authorized by all necessary corporate action, (ii)
does not contravene any provision of its charter, its by-laws, any
unanimous agreement of all the shareholders of the Borrower, if any,
or any law, decree, order, rule or regulation of Canada, the province
of Quebec or other jurisdiction in which its assets are located, (iii)
will not contribute to, or constitute, or result in a breach of, or a
default under, or be in conflict with, any deed, indenture, mortgage,
franchise, licence, judgment, agreement or instrument to which the
Borrower is a party or by which it is bound; and (iv) will not result
in any lien, charge or encumbrance on any of the property or assets of
the Borrower except as provided in the Security Documents;
2.1.3 all registrations, filings, consents (including landlord's security
holders' consents), licences, decrees, approvals (including exchange
control approvals), and notices to, with or of, any governmental
authority or agency, tribunal, department, commission or other public
body or authority which are necessary for the due execution, delivery
and performance by the Borrower of this Agreement, its Notes, the
Letter of Offer and the Security Documents or for the legality,
validity and enforceability thereof, have been obtained and are in
full force and effect;
2.1.4 this Agreement, the Letter of Offer and each of the Security Documents
are, and each of its Notes when delivered to the Lender will be,
legal, valid and binding direct and unconditional obligations of the
Borrower enforceable against the Borrower in accordance with their
respective terms, except to the extent such enforcement may be
restricted by any applicable bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting creditors' rights
generally;
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2.1.5 there is no litigation, action or other legal proceeding pending or
threatened before any court, tribunal, commission or other
administrative agency against the Borrower or any of its property
which, if adversely determined, might result in a material adverse
change in the Borrower's financial condition or its assets or
operations or which might affect the Borrower's ability to perform its
obligations under this Agreement, its Notes, the Letter of Offer or
the Security Documents;
2.1.6 the Borrower is not in default under this Agreement, its Notes, the
Letter of Offer or the Security Documents nor has it done or omitted
to do anything which, with the giving of notice or the passage of
time, or both, would constitute an Event of Default and the Borrower
is not in default under any other agreement for monies borrowed,
raised or guaranteed to which the Borrower is a party or by which it
is bound and no holder of such outstanding indebtedness has given
notice of any default thereunder which has not been cured;
2.1.7 the opening balance sheet of the Borrower as at the Closing Date (as
defined in the Acquisition Agreement) presents fairly the financial
condition of the Borrower as at such date; since the last day of the
fiscal period covered by the financial statements of the Borrower most
recently delivered to the Lender pursuant to Section 9.1 hereof, there
has occurred no material adverse change in the Borrower's operations
or financial condition as reflected in such financial statements; the
information, exhibits and reports furnished to the Lender contain no
material misstatement of fact nor do they omit to state any fact
which might make any statement contained in them misleading;
2.1.8 there are no outstanding judgments, writs of execution, work orders,
notices of deficiency capable of resulting in work orders, injunctions
or directives against the Borrower or any of its property or assets;
2.1.9 the Borrower is the sole owner of, and has good and marketable title
to, all its assets, and, subject to Permitted Encumbrances, the same
are free and clear of all mortgages, hypothecs, liens, privileges and
other encumbrances and the Borrower has good right and lawful
authority to hypothecate, mortgage,
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pledge, charge, cede, transfer or assign to the Lender the property
hypothecated, mortgaged, pledged, charged, ceded, transferred or
assigned to the Lender pursuant to the Security Documents and has
granted no security to any Person which ranks, or is capable of
ranking, prior to or pari passu with the security granted pursuant to
the Security Documents;
2.1.10 a policy of insurance or policies of insurance in compliance with the
requirements of Section 9.1.13 of this Agreement are in effect;
2.1.11 the Borrower is a wholly-owned Subsidiary of SP ACQUISITION CO., A
Delaware corporation;
2.1.12 XXXXX POLYMERS, INC., a Texas corporation,is a wholly-owned Subsidiary
of SP Acquisition Co., a Delaware corporation;
2.1.13 the issued and paid up capital stock of the Borrower consists of 10
common shares;
ARTICLE 3
THE TERM LOAN
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3.1 Amount and Advance of the Term Loan
-----------------------------------
3.1.1 Subject to the provisions of this Agreement and of the Letter of
Offer, the Lender hereby agrees to lend to the Borrower an amount of
ONE MILLION THREE HUNDRED THOUSAND CDOLLARS (C$1,300,000) (the "TERM
LOAN").
3.1.2 The Term Loan is to be lent to the Borrower for the exclusive purpose
of refinancing a portion of the debt of the Borrower towards XXXXX
PAPER COMPANY in the amount of TWO MILLION U.S. DOLLARS
(U.S.$2,000,000).
3.1.3 The Term Loan shall be entirely drawn down by the Borrower by way of
one Advance on or before March 31, 1994, after which date the Lender's
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commitment to advance the Term Loan shall expire, without any notice
being required to such effect.
3.2 Repayment of the Term Loan
--------------------------
The Term Loan shall be repaid by the Borrower to the Lender in sixteen (16)
equal consecutive quarterly instalments of EIGHTY-ONE THOUSAND TWO HUNDRED AND
FIFTY CDOLLARS (C$81,250) each, the first of such instalments to be paid on the
last Banking Day of February, 1995 and thereafter on the last Banking Day of
each succeeding months of February, May, August and November up to and including
the last Banking Day of November, 1998, the date on which all amounts then due
and owing under the Term Loan, in capital, interest and costs, shall become due
and payable.
3.3 Interest on the Term Loan
-------------------------
3.3.1 The Term Loan and the balance thereof at any time remaining unpaid
shall bear interest both before and after maturity and both before and
after default at a variable rate per annum which at all time shall be
equal to the Canadian Rate.
3.3.2 All overdue interest and principal sums in respect of the Term Loan
payable hereunder shall bear interest both before and after maturity
and before and after default at the Canadian Rate from the due date to
the date of actual payment.
3.3.3 Interest on the Term Loan shall be payable by the Borrower to the
Lender at the Lender's Branch monthly in arrears on the last Banking
Day in each month from February 28, 1994.
3.4 Prepayment of the Term Loan
---------------------------
Prepayments on the Term Loan may be made only in accordance with the terms and
conditions of the Letter of Offer. The term of the Term Loan is for the benefit
of the Lender and of the Borrower. All prepayments will be applied against the
last installment or
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instalments on the Term Loan. The Borrower acknowledges that the Letter of
Offer provides for mandatory prepayments in certain circumstances.
ARTICLE 4
OTHER CREDIT FACILITIES
-----------------------
4.1 Terms and Conditions
--------------------
4.1.1 The Borrower hereby acknowledges and agrees to all the terms and
conditions of the Letter of Offer including, without limitation, those
pertaining to the Credit Facilities.
4.1.2 The Borrower acknowledges and agrees that notwithstanding the
authorized amount of each Credit Facilities, Borrowings under the
Credit Facilities may not be available if the Borrower is not or,
after such Borrowing, would not be in compliance with the margin
requirements set forth in the Letter of Offer.
4.1.3 The Borrower acknowledges that amounts owing from time to time under
the Credit Facilities shall bear interest at rate(s) agreed upon from
time to time between the Borrower and the Lender, calculated and
payable monthly in arrears and compounded monthly at such rate(s).
ARTICLE 5
FEES
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5.1 Commitment Fee
--------------
The Borrower agrees to pay to the Lender a commitment fee in CDollars on the
maximum authorized amount of the Term Loan at a rate of three eights of one
percent (3/8%) per annum from January 21, 1994 up to and including the date on
which the Term Loan is advanced to the Borrower. Such commitment fee shall be
payable in arrears on the last Banking Day of March, June, September and
December. The commitment fee shall be computed on the basis of the actual
number of days for which such fee is payable divided by the actual number of
days in the year.
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5.2 Application Fee
---------------
The Borrower shall pay to the Lender an application fee of TWENTY-FIVE THOUSAND
CDOLLARS (C$25,000) in respect of the credit facilities offered in the Letter of
Offer. This fee is non refundable and was fully earned by the Lender at the
time of issuance of the Letter of Offer.
ARTICLE 6
CHANGE IN CIRCUMSTANCES
-----------------------
6.1 Increased Costs
---------------
If either the introduction of or any change in any law, regulation, treaty or
official directive, or in the interpretation thereof, presently or subsequently
in effect, or the Lender's compliance with any request from any central bank or
other governmental authority (whether or not having the force of law):
6.1.1 subjects the Lender to any Tax with respect to payments of principal
of, interest on or any other amount due from the Borrower to the
Lender in USDollars (except for taxes on the overall net income of the
Lender); or
6.1.2 imposes, modifies or deems applicable any reserve, capitalization,
special deposit or similar requirements against assets held by, or
deposits in or for the account of, or loans by, an office of the
Lender; or
6.1.3 imposes on the Lender any other condition or term with respect to all
or any portion of the Loan in USDollars;
and, as a result thereof, the Lender directly or indirectly incurs an increase
in its cost or a reduction of the income receivable by it in respect of the
Loan or any portion thereof, the Borrower shall pay to the Lender within ten
(10) days of receipt of the notice referred to in the next sentence hereof, that
amount which shall compensate the Lender for such additional cost or reduction
in income (herein "ADDITIONAL COMPENSATION"). Upon the Lender having determined
that it is entitled to Additional Compensation in accordance with the provisions
of this Section 6.1, it shall promptly give the Borrower notice thereof. A
certificate of the
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Lender setting forth the amount of such payment and the basis of calculation
thereof shall be prima facie evidence of such amount.
6.2 Illegality
----------
Notwithstanding anything to the contrary contained in this Agreement or the
Letter of Offer, if any introduction of or change in any law, regulation, treaty
or official directive or any change in the interpretation or application thereof
by any court or by any governmental authority charged with the administration
thereof makes it unlawful or prohibited for the Lender to make, fund or maintain
all or any portion of the Loan in USDollars or to give effect to its obligations
contemplated by this Agreement or the Letter of Offer, the Lender shall notify
the Borrower in writing of the change and, within the period determined by the
Lender acting reasonably and specified in the notice, at the option of the
Borrower,
6.2.1 the Borrower shall elect that the Loan in USDollars shall be
immediately converted into CDollars and interest thereon shall be
payable at the rate applicable to Advances in CDollars under the
relevant Credit Facility; or
6.2.2 the Borrower shall elect to repay and, within the time required by the
new law (or at the end of any longer period that such Lender at its
discretion may agree), the Borrower shall repay the Loan in USDollars
together with accrued interest up to the date of payment and all other
amounts which are due, and in any such event the obligation of the
Lender to make any further Loan in USDollars shall terminate for so
long as any circumstance entitling the Lender to give such a notice
shall continue.
ARTICLE 7
PAYMENTS, TAXES, EXPENSES AND INDEMNITY
---------------------------------------
7.1 Time and Place of Payment
-------------------------
The Borrower shall make each payment pursuant to this Agreement, the Letter of
Offer and the Credit Facilities in cash or any other form of payment which the
Lender may accept from time to time before 11:30 a.m. (Montreal time) on the day
specified for payment at the Lender's Branch. Whenever a payment is due to be
made on a day which is not a Banking
-16-
Day, the day for payment shall be the following Banking Day. Notwithstanding the
provisions of Article 1564 of the Civil Code of Quebec, no payment made by the
Borrower to the Lender shall be valid unless the Lender actually receives the
value of such payment.
7.2 Currency of Payment
-------------------
Principal, interest and interest on overdue amounts on the Borrowings in
CDollars shall be payable in CDollars and principal, interest and interest
on overdue amounts on Borrowings in USDollars shall be payable in US Dollars.
7.3 Setoff Etc.
----------
The Borrower shall make all payments hereunder, the Letter of Offer and the
Credit Facilities regardless of any setoff, counterclaim or compensation.
7.4 Taxes
-----
The Borrower shall make all payments on the Loan in USDollars free and clear of,
and exempt from, and without deduction for, or on account of, any Tax. If any
Tax, other than taxes on the overall net income of the Lender, is deducted or
withheld from any payment, the Borrower shall promptly remit to the Lender the
amount so deducted or withheld together with relevant receipts from the taxing
authority addressed to the Lender. If the Borrower is prevented by operation of
law or otherwise from paying, causing to be paid or remitting such Tax, the
interest payable under this Agreement or the Letter of Offer will be increased
to the rates necessary to yield and remit to the Lender the principal sum
advanced together with interest at the rates specified in this Agreement of the
Letter of Offer after provision for payment of such Tax. At the request of the
Lender, the Borrower shall from time to time execute and deliver any and all
further documents as may be necessary or advisable to give full force and effect
to such increase in the rate of interest. The Borrower further covenants to
indemnify the Lender in respect of any claim or loss incurred as a result of the
Borrower's delay or failure to deduct or to withhold any such Tax, including all
penalties and interest.
-17-
7.5 Evidence of Indebtedness - Notes
--------------------------------
The indebtedness of the Borrower resulting from each Advance shall, if requested
by the Lender, be evidenced by a Note, each Note to be in the currency and for
the principal amount of the Advance, dated the date of the Advance, payable to
the Lender, duly completed and executed by the Borrower, in all cases delivered
in accordance with Article 8.
7.6 Expenses and Indemnity
----------------------
7.6.1 The Borrower shall supply all statements, reports, certificates,
opinions, appraisals and other documents or information required to be
furnished to the Lender pursuant to this Agreement or the Letter of
Offer without cost to the Lender.
7.6.2 The Borrower agrees to pay on demand all reasonable out-of-pocket
costs and expenses of the Lender in connection with the preparation,
negotiation, execution, delivery, registration and operation of this
Agreement, the Notes, the Letter of Offer and the Security Documents
including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Lender and of special counsel who may be
retained by said counsel or by the Lender with respect thereto and
with respect to advising the Lender as to its rights and
responsibilities under this Agreement, the Notes, the Letter of Offer
and the Security Documents. The Borrower further agrees to pay on
demand all costs and expenses, if any, of the Lender (including
reasonable fees and expenses of counsel and special counsel for the
Lender), in connection with any enforcement of this Agreement, the
Notes, the Letter of Offer and the Security Documents including,
without limitation, costs and expenses sustained by the Lender as a
result of any failure by the Borrower to perform or observe its
obligations contained herein or in any of the Security Documents.
7.6.3 The Borrower agrees to indemnify the Lender against any loss or
expense which it may sustain or incur in obtaining or redeploying
deposits as a result of the failure by the Borrower to pay when due
any principal of the Loan, to the extent that any such loss or expense
is not recovered pursuant to any other provisions hereof. A
certificate of the Lender setting forth the basis for
-18-
the determination of the interest due on overdue principal or interest
and of the amounts necessary to indemnify such Lender in respect of
such loss or expense, submitted to the Borrower, shall be conclusive
and binding for all purposes except in case of manifest error.
7.7 Survival of Indemnification Obligations
---------------------------------------
Without prejudice to the survival or termination of any other agreement of the
Borrower under this Agreement, the obligations of the Borrower under Sections
7.4 and 7.6 survive the termination of the Credit Facilities and the repayment
in full of the Loan.
7.8 Application of Payments
-----------------------
All payments made by or on behalf of the Borrower to the Lender pursuant to this
Agreement, the Credit Facilities or the Letter of Offer shall be applied as the
Lender, in its discretion, may from time to time determine.
ARTICLE 8
PRE-DISBURSEMENT CONDITIONS
---------------------------
8.1 Conditions Precedent to the initial Advance
-------------------------------------------
The obligation of the Lender to make its initial Advance hereunder is subject to
and conditional upon the prior fulfilment of the following conditions to the
satisfaction of the Lender and its counsel:
8.1.1 on or prior to 10:00 a.m. (Montreal time) on the initial Drawdown
Date, the Lender shall have received the following, each dated the
Drawdown Date:
8.1.1.1 certified copies of the charter and by-laws of the Borrower
and of all documents and resolutions evidencing necessary
corporate action of the Borrower, approving and authorizing
the execution, delivery and performance of this Agreement,
the Notes, the Letter of Offer and each Security Document
and evidencing any other necessary corporate action with
respect to
-19-
this Agreement, the Notes, the Letter of Offer and each
Security Document and the instruments, certificates or other
documents contemplated herein, and approving and authorizing
the manner in which and by whom the foregoing documents are
to be executed and delivered;
8.1.1.2 certified copies of any and all necessary governmental
authorizations and approvals (including any exchange control
approvals) required with respect to this Agreement, the
Notes, the Letter of Offer and each Security Document;
8.1.1.3 a certificate of the Secretary of the Borrower certifying
the names and true signature of the officers of the Borrower
authorized to sign this Agreement, the Notes, the Letter of
Offer and each Security Document and any other documents or
certificates to be delivered pursuant to this Agreement;
8.1.1.4 a certificate of two senior officers of the Borrower to the
effect that the officers signing have personal knowledge of
the facts and that all representations and warranties of the
Borrower set forth in Article 2 and Article 10 hereof are
true as of the Drawdown Date;
8.1.1.5 a favourable opinion of legal counsel to the Borrower,
addressed to the Lender and its counsel, in form and
substance satisfactory to the Lender and its counsel,
respecting all transactions relating to the Credit
Facilities and security and other documentation required
hereunder, as to matters set forth in Article 2 hereof and
as to other matters reasonably requested by the Lender;
8.1.1.6 a favourable opinion of legal counsel to the Lender,
addressed to the Lender, in form and substance satisfactory
to the Lender;
-20-
8.1.2 the Borrower shall have duly executed and delivered to the Lender each
of the Security Documents, each such Security Document to be in form
and substance satisfactory to the Lender and its counsel;
8.1.3 the Lender shall have received evidence satisfactory to the Lender
that the transactions set forth in the Acquisition Agreement dated
January 25, 1994 between Xxxxx Paper Company and SP Acquisition Co.
(the "ACQUISITION AGREEMENT") have been consummated and that the said
agreement constitutes valid and binding obligations of the parties
thereto enforceable in accordance with its terms, the whole in form
and substance satisfactory to the Lender and its legal counsel;
8.1.4 all other conditions provided in the Letter of Offer shall have been
met to the satisfaction of the Lender; and
8.1.5 the Borrower shall have delivered to the Lender insurance certificates
or other evidence issued by the insurer or a reputable broker
evidencing that the Borrower is in compliance with Section 9.1.13 of
this Agreement, together with originals (or copies certified by the
insurers) of all policies evidencing such insurance (or certificates
therefor), which certificates or other evidence and policies shall be
in form and substance satisfactory to the Lender.
8.2 Conditions Precedent to each Advance
------------------------------------
The obligation of the Lender to make each Advance, including the initial Advance
under any of the Credit Facilities, hereunder is subject to and conditional
upon the prior fulfilment of the following conditions to the satisfaction of the
Lender and its counsel:
8.2.1 if required by the Lender, the Lender shall have received a Note
payable to the Lender, in the currency of and the amount of each
Advance required duly completed and executed by the Borrower and in
form and substance satisfactory to the Lender and its counsel;
8.2.2 on the date of each such Advance, the following statements shall be
true to the satisfaction of the Lender and its counsel (and the
acceptance by the
-21-
Borrower of the proceeds of such Advance shall be deemed to constitute
a representation and warranty by the Borrower that on the date of such
Advance such statements are true):
8.2.2.1 the representations and warranties contained in Article 2
and Article 10 are true and correct on and as of the date of
such Advance as though made on and as of such date; and
8.2.2.2 no event has occurred and is continuing, or would result
from such Advance, which constitutes an Event of Default or
would constitute an Event of Default but for the requirement
that notice be given or time elapse or both.
8.2.3 the Borrower shall have delivered all such other documents and
complied with all such other conditions provided the Letter of Offer
on which the Lender may reasonably require or establish.
8.3 Waiver
------
The terms and conditions of Sections 8.1 and 8.2 hereof are inserted for the
sole benefit of the Lender and may be waived by the Lender in whole or in part,
with or without terms or conditions, in respect of any Advance without
prejudicing the right of the Lender to assert these terms and conditions in
whole or in part in respect of any other Advance.
ARTICLE 9
COVENANTS
---------
9.1 Covenants of the Borrower
-------------------------
The Borrower covenants and agrees with the Lender that, so long as any of the
indebtedness of the Borrower hereunder or under any of the Credit Facilities
shall remain unpaid or all the obligations to make any Advance to the Borrower
shall not have been terminated, unless the Lender shall otherwise have
previously consented in writing:
-22-
9.1.1 the Borrower shall duly and punctually pay all sums of money due by it
under the terms of or pursuant to this Agreement, the Letter of Offer,
the Credit Facilities and the Notes at the times and places and in the
manner provided for by this Agreement, the Letter of Offer and the
Notes and shall duly and punctually perform and observe all other
obligations on its part to be performed or observed hereunder and
under the Security Documents at the times and in the manner provided
for herein or therein;
9.1.2 the Borrower shall maintain its corporate existence in good standing
and shall not consolidate with, amalgamate with or merge with any
other Person or permit any other Person to consolidate, amalgamate or
merge with it;
9.1.3 the Borrower shall, as soon as available and in any event within one
hundred and twenty (120) days after the end of each fiscal year of the
Borrower, cause to be prepared and delivered to the Lender audited
financial statements (including a balance sheet as of the end of such
fiscal year and statements of income and retained earnings and of
changes in financial position for the period commencing at the end of
the previous fiscal year and ending with the end of such fiscal year)
of the Borrower prepared in accordance with generally accepted
accounting principles and reported on by Xxxxxxxxx Xxxxxxx Coopers &
Xxxxxxx or other independent chartered accountants of recognized
standing, together with a certificate of the chief financial officer
of the Borrower containing sufficient information as to permit the
Lender to determine that the covenants contained in this Section are
being met by the Borrower as required and to the effect that, to the
best knowledge of such officer, as of the date of such certificate, no
event has occurred and is continuing which constitutes an Event of
Default hereunder or which would, with the giving of notice or lapse
of time or both, constitute an Event of Default hereunder;
9.1.4 the Borrower shall deliver to the Lender as soon as available and in
any event within forty-five (45) days after the end of each of the
quarterly fiscal periods in each fiscal year of the Borrower, a copy
of its unaudited financial statements (including a balance sheet as of
the end of such quarter and statements of income and retained earning
and of changes in financial position
-23-
for the period from the end of the preceding fiscal year to the end of
such quarterly period) prepared in accordance with generally accepted
accounting principles, together with a certificate of the chief
financial officer of the Borrower to the effect that, to the best of
knowledge of such officer, as of the date of such certificate no event
has occurred and is continuing which constitutes an Event of Default
hereunder or which would, with the giving of notice or lapse of time
or both, constitute an Event of Default hereunder;
9.1.5 the Borrower shall from time to time deliver to the Lender any other
financial and operating reports, information and statements which the
Lender reasonably requests including, without limitation, those
referred to in the Letter of Offer, the whole in form and substance
satisfactory to the Lender;
9.1.6 the Lenders may rely on the authority of the individuals named in the
certificate delivered pursuant to Section 8.1.1.3 hereof until notice
to the contrary from the Borrower is received by the Lender;
9.1.7 the Borrower shall promptly give notice to the Lender of the
occurrence of any Event of Default or of any event or condition which
would, with the giving of notice or lapse of time or both, constitute
an Event of Default;
9.1.8 the Borrower shall as soon as possible, and in any event within ten
(10) days after the Borrower has received notice of the commitment
thereof, give notice to the Lender of any litigation, proceeding or
dispute affecting the Borrower or its property before any court,
tribunal, commission or other administrative agency which, if
determined adversely, would have a material adverse effect on the
financial condition or operations of the Borrower; from time to time,
the Borrower shall provide all reasonable information requested by the
Lender concerning the status of any such litigation, proceeding or
dispute;
9.1.9 except for Permitted Encumbrances, the Borrower shall not, nor shall
it permit any Subsidiary to, create, assume, incur or suffer to exist
any mortgage, hypothec, lien, prior claims, security interest, charge
or other encumbrance or rights in respect of any property of the
Borrower or of any Subsidiary, whether the property is owned at the
date of this Agreement or acquired subsequently;
-24-
9.1.10 the Borrower shall do all things required by the Lender in order to
fully and effectively maintain and keep maintained the security
created by the Security Documents as valid and effective security;
9.1.11 the Borrower shall not sell, transfer, dispose of or lease or enter
into any commitment or option for the sale, transferal, disposition or
lease of all or substantially all of its assets to any Person, save
and except for the sale of assets of the Borrower not exceeding the
aggregate amount of ONE HUNDRED THOUSAND CDOLLARS (C$100,000) in any
fiscal year of the Borrower;
9.1.12 the Borrower shall promptly pay or cause to be paid all rents or Taxes
levied, assessed or imposed on all or any part of its property as and
when the same become due;
9.1.13 the Borrower shall at all times insure and keep insured all of its
buildings, plants, equipment and all other property which is of an
insurable nature with responsible and reputable insurers to the full
replacement cost thereof against loss or damage by accident, fire,
theft and other insurable risks in the manner and to the extent
usually carried by companies in similar businesses and owning similar
properties; the Borrower shall also maintain business interruption
insurance in such amounts and with such insurers as shall be
satisfactory to the Lender; the Borrower shall duly and promptly pay
all premiums and other sums of money for the placing and maintaining
of such insurance and shall cause the insurance money thereunder to be
payable to the Lender as its interest hereunder and under the Security
Documents may appear; and the Borrower shall promptly deliver to the
Lender certificates of insurance for any such insurance policies with
appropriate endorsements designating the Lender as an additional
insured as its interests may appear and, when required, deliver
evidence of payment of premium; such certificates of insurance shall
contain a loss-payee clause, in form and substance satisfactory to the
Lender, and shall contain a notice of cancellation provision
satisfactory to the Lender. In the event the Borrower fails to insure
and keep insured or fails to pay any premiums in accordance with the
foregoing, the Lender may so insure, keep in insured and pay premiums
and the Borrower
-25-
shall indemnify the Lender for any amount thereby expended or cost
thereby incurred;
9.1.14 the Borrower shall not make capital expenditures (net of proceeds of
trade ins and disposal) or incur any debt or liability therefore
(including leases and purchase money security interest) in excess of a
maximum aggregate amount of ONE MILLION NINE HUNDRED AND TWENTY
THOUSAND CDOLLARS (C$1,920,000) in its fiscal year ending December 31,
1994, of THREE HUNDRED AND EIGHTY-FOUR THOUSAND CDOLLARS (C$384,000)
in its fiscal year ending December 31, 1995, of SIX HUNDRED AND FORTY
THOUSAND CDOLLARS (C$640,000) in its fiscal year ending December 31,
1996 and of THREE HUNDRED AND EIGHTY-FOUR THOUSAND CDOLLARS
(C$384,000) in its fiscal year ending December 31, 1997 and
thereafter. The Borrower may defer capital expenditures not exceeding
a maximum aggregate amount of FOUR HUNDRED THOUSAND CDOLLARS
(C$400,00) for a period not exceeding one (1) year;
9.1.15 the Borrower shall maintain at all times, the ratio of its "CASH
AVAILABLE FOR DEBT SERVICE" to its "DEBT SERVICE" equal to or greater
than 4.0:1 for each consecutive twelve (12) month period ending in its
fiscal year ending December 31, 1994, equal to or greater than 2.0:1
for each consecutive twelve (12) month period ending in its fiscal
year ending December 31, 1995, equal to or greater than 2.0:1 for
each consecutive twelve (12) month period ending in its fiscal year
ending December 31, 1996, equal to or greater than 2.0:1 for each
consecutive twelve (12) month period ending in its fiscal year ending
December 31, 1997 and equal to or greater than 3.0:1 for each
consecutive twelve (12) month period ending in its fiscal year ending
December 31, 1998 and thereafter. For the purposes hereof, (i) "CASH
AVAILABLE FOR DEBT SERVICE" means earnings before deduction of
interest, depreciation, amortization and taxes and other non-cash
items, as appropriate, minus actual capital expenditures made to
sustain existing fixed assets and current taxes payable; (ii) "DEBT
SERVICE" means the total of interest expense and scheduled principal
repayments in respect of all amounts owing by the Borrower under the
Credit Facilities and all amounts owing in respect of any other debt
obligation (including leases);
-26-
9.1.16 the Borrower shall maintain its "TOTAL DEBT" to "TANGIBLE NET WORTH"
equal to or less than 3.0:1 during its fiscal year ending December 31,
1994, equal to or less than 2.0:1 during its fiscal year ending
December 31, 1995, equal to or less than 2.0:1 during its fiscal year
ending December 31, 1996 and equal to or less than 1.0:1 during its
fiscal year ending December 31, 1997 and thereafter. For the purposes
hereof, "TOTAL DEBT" of the Borrower shall mean all debts of the
Borrower less Subordinated Indebtedness; and "TANGIBLE NET WORTH" of
the Borrower shall mean the aggregate of paid up capital and retained
earnings of the Borrower plus Subordinated Indebtedness less non
tangible assets of the Borrower (including goodwill, loans to or
investments in Affiliates and Subsidiaries and loans and advances to
any director, officer, employee or shareholder of the Borrower), the
whole as determined by the Lender;
9.1.17 the Borrower shall maintain at all times the ratio of its "CURRENT
ASSETS" to "CURRENT LIABILITIES" at no less than 0.5:1 during its
fiscal year ending December 31, 1994, at no less than 0.5:1 during its
fiscal year ending December 31, 1995, at no less than 0.75:1 during
its fiscal year ending December 31, 1996, at no less than 0.75:1
during its fiscal year ending December 31, 1997 and at no less than
1.0:1 during its fiscal year ending December 31, 1998 and thereafter.
"CURRENT ASSET" and "CURRENT LIABILITIES" shall have the meaning
ascribed to such terms in accordance with the generally accepted
accounting principles in Canada applied consistently;
9.1.18 the Borrower shall not declare or pay any dividends or make any other
payment of distribution in respect of any shares of its capital stock
or make any change in its issued or authorized capital stock either by
way of redemption of stock or otherwise;
9.1.19 the Borrower shall not make any loans or advances or otherwise grant
any financial assistance of any nature whatsoever to any Person;
9.1.20 the Borrower shall not pay to any Affiliate of the Borrower
administration or management fees or other inter-company charges in
excess of an aggregate
-27-
principal amount of TWENTY-FIVE THOUSAND CDOLLARS (C$25,000) in any
one of its fiscal year;
9.1.21 the Borrower shall not amend any of the Material Contracts entered
into; and
9.1.22 the Borrower shall not incur or create any further or additional
indebtedness except to the Lender, except such additional indebtedness
as may be incurred in the ordinary course of business and except for
such indebtedness secured or evidenced by Title Retention Instruments,
the whole subject to the provisions of Section 9.1.14.
ARTICLE 10
ENVIRONMENTAL MATTERS
---------------------
10.1 Definitions
-----------
In this article:
10.1.1 "APPLICABLE ENVIRONMENTAL LAWS" means all applicable federal,
provincial, municipal and other laws, statutes, regulations, by-laws
and codes, now or hereafter in existence, intended to protect the
environment or relating to Hazardous Material (as hereinafter
defined), including without limitation the Environment Quality Act
(Quebec), the Occupational Health and Safety Act (Quebec), the Water
Courses Act (Quebec), the Fisheries Act (Canada), the Canadian
Environmental Protection Act (Canada), the Environmental Assessment
and Review Process Guidelines Order (Canada), the Transportation of
Dangerous Goods Act (Canada) and the Navigable Waters Protection Act
(Canada);
10.1.2 "HAZARDOUS MATERIAL" means, collectively, any contaminant or pollutant
or any other substance which when released to the natural environment
is likely to cause at some immediate or future time, material harm or
degradation to the natural environment or material risk to human
health and without restricting the generality of the foregoing
hazardous waste or toxic substances as defined by Applicable
Environmental Laws.
-28-
10.2 Representations and Warranties
------------------------------
The Borrower hereby represents and warrants that:
10.2.1 neither the Borrower nor, to its knowledge, after due enquiry
excluding an environmental audit, any other Person (including without
limitation any tenant or previous tenant or occupant of the Lands or
any part thereof) has ever caused or permitted any Hazardous Material
to be disposed of on, under or at the Lands and all Hazardous Material
stored on the Lands are and shall be stored in compliance with
Applicable Environmental Laws;
10.2.2 the business and assets of the Borrower are in compliance with all
Applicable Environmental Laws;
10.2.3 the Borrower has not received notice nor has any knowledge of any
control order, stop order, minister's order, preventive order or other
enforcement action threatened or issued or pending by any governmental
agency in respect of the Lands and Applicable Environmental Laws; and
10.2.4 the Borrower has not received notice nor has any knowledge of any
action or proceeding, threatened or pending, relating to the existence
in, on or under the Lands or on property adjoining the Lands of, or
the spilling, discharge or emission on or from the Lands or any such
adjoining property of, any Hazardous Material.
10.3 Covenants
---------
The Borrower covenants that:
10.3.1 the Borrower will not cause or knowingly permit to occur, a discharge,
spillage, seepage or filtration of any Hazardous Material at, upon,
under, into or within the Lands or any contiguous real estate to the
Lands;
10.3.2 the Borrower shall, and shall use best efforts to cause any Person
permitted by the Borrower to use or occupy the Lands or any part
thereof, to continue
-29-
to operate its business and assets (including the Lands) in compliance
with the Applicable Environmental Laws and upon delivery of the notice
set out in Section 10.3.5 to the Lender, shall permit the Lender on
reasonable notice to the Borrower, subject to the rights of tenants
and in default of the Borrower taking appropriate action, to conduct
at the Borrower's expense (provided such expense is reasonable) tests,
inspections and appraisals including without limitation, the right to
conduct soil tests of all or any of the Lands and to review and copy
any relevant records of the Borrower (which are not subject to a
confidentiality obligation) insofar as they relate to the Lands at any
time and from time to time to ensure compliance;
10.3.3 the Borrower shall comply with the requirements of the Applicable
Environmental Laws (including, but not limited to obtaining any
permits, licenses or similar authorizations to construct, occupy,
operate or use the Lands or any fixtures or equipment located thereon
by reason of the Applicable Environmental Laws) and shall notify the
Lender promptly in the event of any spill or location of Hazardous
Material upon the Lands, and shall promptly forward to the Lender
copies of all orders, notices, permits, applications or other
communications and reports in connection with any spill or any other
matters relating to the Applicable Environmental Laws, as they may
affect the Lands;
10.3.4 the Borrower will not install on the Lands, nor knowingly permit to be
installed on the Lands, asbestos or any substance containing asbestos
deemed hazardous by any Applicable Environmental Laws;
10.3.5 the Borrower shall promptly notify the Lender of any suspected
violation of the Applicable Environmental Laws or any threatened
investigation or inquiry by any governmental authority which comes to
the attention of the Borrower in connection with any Applicable
Environmental Laws; and
10.3.6 the Borrower, promptly upon the written request of the Lender from
time to time shall complete the Lender's environmental checklist and
if such completed checklist discloses a matter concerning a Hazardous
Material or possible violation of environmental laws then the
Borrower, promptly upon
-30-
the written request of the Lender, shall provide the Lender with an
environmental site assessment or environmental audit report, or an
update of such assessment or report, respecting such matter, all in
scope, form and content satisfactory to the Lender, at the Borrower's
expense.
10.4 Indemnity
---------
The Borrower indemnifies and holds harmless the Lender and its officers,
directors, employees, agents and shareholders and any receiver or receiver and
manager appointed by or on the application of the Lender (the "INDEMNIFIED
PERSONS"), from and against and shall reimburse the Lender for any and all
losses, liabilities, claims, damages, costs and expenses, including legal fees
and disbursements on a solicitor and his own client basis, suffered, incurred by
or asserted against any of the Indemnified Persons whether as holder of any
security, as mortgagee in possession, as successor in interest to the Borrower
as owner of the Lands by virtue of foreclosure or acceptance of a transfer in
lieu of foreclosure or otherwise:
10.4.1 under or on account of the Applicable Environmental Laws, including
the assertion of any lien thereunder;
10.4.2 for, with respect to, or as a result of, the presence on or under, or
the discharge, emission, spill or disposal from, the Lands or into or
upon any land or the atmosphere, of any Hazardous Material where a
source of the Hazardous Material is the Lands or any fixtures or
equipment located thereon including, without limitation:
10.4.2.1 the costs of defending and or counterclaiming or
claiming over against third parties in respect of any
action or matter; and
10.4.2.2 any costs, liability or damage arising out of a
settlement of any action entered into by the Lender;
10.4.3 in complying with or otherwise in connection with any order, consent,
decree, settlement, judgment or verdict arising from the deposit,
storage, disposal, burial, dumping, injecting, spilling, leaking, or
other placement or release in,
-31-
on or from the Lands of any Hazardous Material (including without
limitation any order under the Applicable Environmental Laws to clean-
up or decommissioning), whether or not such deposit, storage,
disposal, burial, dumping, injecting, spilling, leaking or other
placement or release in, on or from the Lands of any Hazardous
Material:
10.4.3.1 resulted by, through or under the Borrower; or
10.4.3.2 occurred with the Borrower's knowledge and consent; or
10.4.3.3 occurred before or after the date of this Agreement,
whether with or without the Borrower's knowledge.
The provisions of this paragraph shall survive foreclosure of the
charges, hypothecs and security interests constituted by any Security
Document and satisfaction and release of the Security Documents and
satisfaction and repayment of the indebtedness secured by the Security
Documents. Any amounts for which the Borrower shall become liable to
the Lender hereby under this Section 10.4 shall, if paid by any
Indemnified Person, bear interest from the date of payment at the
Canadian Rate.
10.5 Environmental Clean-Up
----------------------
In the event of any spill of Hazardous Material affecting the Lands, whether or
not the same originates or emanates from the Lands, and if the Borrower fails to
comply with any of the requirements of the Applicable Environmental Laws in
respect thereof, or if the Borrower otherwise fails to comply with any of the
requirements of the Applicable Environmental Laws the Lender may at its
election, but without the obligation so to do, give such notices and cause such
work to be performed at the Lands and take any and all other actions as the
Lender shall deem necessary or advisable in order to remedy said spill of
Hazardous Material or cure said failure of compliance and any reasonable amounts
paid as a result thereof, together with interest thereon at the Canadian Rate
from the date of payment by the Lender shall be immediately due and payable by
the Borrower to the Lender and until paid shall be added to and become a part of
the indebtedness secured by the Security Documents.
-32-
ARTICLE 11
DEFAULT
-------
11.1 Events of Default
-----------------
Each of the following events shall constitute an Event of Default under this
Agreement, the Letter of Offer and the Credit Facilities:
11.1.1 the Borrower shall fail to make any payment of principal on the Loan
when due, whether due by acceleration or otherwise; or
11.1.2 the Borrower shall fail to make any payment of interest or other
payment (other than a payment referred to in Section 11.1.1) due under
this Agreement, the Credit Facilities, the Letter of Offer or the
Security Documents; or
11.1.3 any representation, warranty, statement or certificate made or
delivered to the Lender or any representation or warranty deemed
pursuant to Section 8.2 hereof to have been made to the Lender or any
financial statement or other information delivered in writing to the
Lender by the Borrower or any of its officers in, or in connection
with, this Agreement, the Credit Facilities or the Letter of Offer is
incorrect or misleading in any material respect; or
11.1.4 the Borrower, Xxxxx Polymers, Inc. or SP Acquisition Co., shall fail
to pay any of its indebtedness (other than that referred to in
Sections 11.1.1 and 11.1.2) or any interest or premium thereon, when
due (whether at scheduled maturity or by required prepayment,
acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement
or instrument relating to such indebtedness; or any other default
under any agreement or instrument relating to any such indebtedness of
the Borrower, Xxxxx Polymers, Inc. or SP Acquisition Co., or any other
event, shall occur and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the
effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such indebtedness; or any such
indebtedness shall be declared to be due and payable, or required to
be prepaid (other than by a regularly scheduled required prepayment),
-33-
prior to the stated maturity thereof; provided however that in the
case of indebtedness of Xxxxx Polymers, Inc. or SP Acquisition Co.
towards a lender other than the Lender or a default of Xxxxx Polymers,
Inc. or SP Acquisition Co. towards a lender other than the Lender, for
so long as Xxxxx Polymers, Inc. or SP Acquisition Co., as the case may
be, are in good faith negotiating diligently with such other lender in
order to arrive at an agreement in respect of such indebtedness or
such default and such other lender shall not have enforced any of its
rights, it shall not constitute an Event of Default hereunder; or
11.1.5 the Borrower or any Person having guaranteed the indebtedness of the
Borrower towards the Lender (hereinafter called a "GUARANTOR") shall
not pay its debts generally as such debts become due, or shall admit
in writing its inability to pay its debts generally as they become
due, or shall make a general assignment for the benefit of creditors;
or any proceeding shall be commenced or instituted by or against the
Borrower or a Guarantor seeking to adjudicate it bankrupt or
insolvent, or seeking winding-up, reorganization, arrangement,
adjustment, dissolution, protection, relief, liquidation or
composition of it or its debt under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking
appointment of a receiver, trustee, sequestrator or other similar
official for it or for any substantial or material part of its
property or seeking the suspension of the operations of the Borrower
or a Guarantor and, in the case of any such proceeding instituted
against the Borrower or a Guarantor and in respect of which the
Borrower or a Guarantor, as the case may be, has not by any act
indicated its consent to, approval of, or acquiesence in, such
proceeding, such proceeding shall remain undismissed for a period of
thirty (30) days unless the Borrower or the Guarantor, as the case may
be, is diligently and in good faith contesting the validity of such
proceeding and forthwith furnishes to the Lender security satisfactory
to the Lender in nature and amount against all loss and damage which
the Lender might suffer by reason thereof; or the Borrower or a
Guarantor shall take corporate action to authorize any of the actions
set forth above in this Section 11.1.5; or a Guarantor gives notice to
the Lender of termination of its guarantee in favour of the Lender or,
subject to the
-34-
provisions of Section 15.10, such guarantee otherwise terminates
without the consent of the Lender; or
11.1.6 the Borrower ceases, or takes steps to cease, carrying on its business
or makes, or agrees to make, a sale of all or any substantial or
material part of its assets; or the Borrower consolidates, amalgamates
or merges with, or takes any action with a view to its consolidation,
amalgamation or merger with, any other Person; or
11.1.7 a writ, execution, attachment or other similar process is issued or
levied against all, or a substantial or material portion of, the
property of the Borrower or of a Guarantor and the writ, execution,
attachment or similar process is not released, bonded, satisfied,
discharged, vacated or stayed within fifteen (15) days after its
entry, issuance, commencement or levy unless the Borrower is
diligently and in good faith contesting the validity of such
proceeding and forthwith furnishes to the Lender security satisfactory
to the Lender in nature and amount against all loss and damage which
the Lender might suffer by reason thereof; or
11.1.8 an encumbrancer or lienor takes possession of any substantial part of
the property of the Borrower or a Guarantor; or an execution or other
similar process is enforced against such property and remains
unsatisfied for such period as would permit such property to be sold
thereunder, less ten (10) Banking Days unless the Borrower is
diligently and in good faith contesting the validity of such
proceeding and forthwith furnishes to the Lender security satisfactory
to the Lender in nature and amount against all loss and damage which
the Lender might suffer by reason thereof; or
11.1.9 the occurrence of an event of default under the Security Documents; or
11.1.10 the occurrence of a change in the control of the Borrower; or
11.1.11 the outstanding Borrowings under any Credit Facility exceed the
maximum authorized amount thereof; or
-35-
11.1.12 the Borrower, Xxxxx Polymers, Inc. or SP Acquisition Co. shall fail to
perform or observe any term, covenant or agreement contained in this
Agreement, in the Letter of Offer or the Security Documents, other
than those heretofore dealt with in this Section 11.1 or shall fail to
perform or observe any term, covenant or provision of any agreement
executed pursuant to, relating to or referred to in this Agreement,
the Letter of Offer or any of the Security Documents and any such
failure shall remain unremedied for fifteen (15) days after written
notice thereof shall have been given to the Borrower by the Lender.
11.2 Effect of a Default
-------------------
Without waiving or otherwise affecting any right of the Lender to demand payment
at any time of all amounts repayable on demand under the Credit Facilities, upon
the occurrence of any Event of Default, the Lender may by notice to the Borrower
(i) declare the obligation of the Lender to make Advances to the Borrower to be
terminated, whereupon the same shall forthwith terminate, and (ii) declare the
Loan, all interest accrued and unpaid thereon and all other amounts payable
under this Agreement, the Letter of Offer, the Notes, the Credit Facilities and
the Security Documents, including the face amount of any outstanding letter or
credit or letter of guarantee, to be forthwith due and payable, whereupon the
Loan, all such accrued interest and all such other amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower,
and any collateral security including the Security Documents shall thereupon
become enforceable. Thereupon the Borrower shall immediately pay to the Lender
all such amounts due and payable.
11.3 Remedies Cumulative; No Waiver
------------------------------
For greater certainty, it is expressly understood and agreed that the rights and
remedies of the Lender under this Agreement, the Notes, the Letter of Offer, the
Security Documents and any other security the Lender may from time to time hold
as security for the performance of all or any part of the Borrower's obligations
hereunder and thereunder are cumulative and are in addition to, not in
substitution for, any rights or remedies provided by law; no failure on the part
of the Lender to exercise, and no delay in exercising, any right or remedy
hereunder or thereunder shall operate as a waiver thereof, nor shall any single
or partial
-36-
exercise by the Lender of any right or remedy for a default or breach of any
term, covenant, condition or agreement herein or therein contained prejudice or
preclude any other or further exercise thereof or the exercise of any other
right or remedy for the same or any other default or breach and shall not waive,
alter, affect or prejudice any other right or remedy.
11.4 Setoff
------
In addition to, and not in limitation of, any rights now or hereafter granted
under applicable law, the Lender is hereby expressly authorized at any time or
from time to time without notice to the Borrower or to any other person, any
such notice being hereby expressly waived by the Borrower, to set-off and to
appropriate and to apply any and all deposits, general or special, matured or
unmatured, and any other indebtedness at any time held by or owing by the Lender
to, or for the credit of, or the account of, the Borrower against and on account
of the obligations and liabilities of the Borrower due and payable to the Lender
under this Agreement, under the Notes, under the Letter of Offer or under the
Security Documents including, without limitation, all claims of any nature or
description arising out of, or connected with, this Agreement, the Notes, the
Letter of Offer or the Security Documents, irrespective of whether or not the
Lender made any demand therefor and although such obligations and liabilities
of, or claims against, the Borrower, or any of them, are contingent or
unmatured.
115. Default Ipso Facto
------------------
In each of the cases set forth in Section 11.1, the Borrower shall be in default
by the mere lapse of time, without any notice putting the Borrower in default
being required.
ARTICLE 12
NOTICE
------
12.1 Notices, Etc.
------------
All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be writing to the party for whom it is intended and
shall be mailed, sent or delivered, to such party at its address set forth
hereunder or shall be sent by telex, telecopier
-37-
or other means of rapid communication at its rapid communication address set
forth hereunder, or at such other address or rapid communication address as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective (i) if mailed,
three (3) Banking Days after deposited in the mails, first class, postage
prepaid, (ii) if delivered, when delivered and (iii) if sent by telex,
telecopier or other means of rapid communication, on the date of transmission if
transmitted before 3 p.m. (Montreal time) on a Banking Day or, in any other
case, on the next following Banking Day. In the event of a postal strike or any
slow-down in the postal service, no notice of or communication by mail shall be
effective if sent during, or within ten (10) Banking Days prior to the
commencement of, such strike or slow-down unless it is actually received by the
party to whom it is addressed and, in such event, it shall be effective only on
the date of actual receipt. The addresses referred to above are as follows:
LENDER: BANK OF MONTREAL
0000 XxxxxXxxxxx Xxxxxxx
Xxxxxx-Xxxxxx (Xxxxxx)
X0X 0X0
Attention: Account Manager
-----------------------------
Telecopier: (000) 000-0000
BORROWER: POLYMERES XXXXX, LTEE -
XXXXX POLYMERS, LTD.
00000 Xxxxx Xxxxxx
Xxxx x'Xxxx (Xxxxxx)
X0X 0X0
Attention: General Manager
----------------------------
Telecopier: (000) 000-0000
-38-
WITH A COPY, FOR Xxxxxxx Xxxxxxxxxx
INFORMATION PURPOSES ONLY, TO: C/O SCOTT POLYMERS, INC.
0000 Xxxxxxxx
Xxxx Xxxxx (Xxxxx)
X.X.X. 00000
Telecopier: (000) 000-0000
-and-
LENGVARI XXXXXX
Xxxxx 0000
0, Xxxxx Xxxxx Xxxxx
Xxxxxxxx (Xxxxxx)
X0X 0X0
Attention: Xx. Xxxx Xxxxxx
----------------------------
Telecopier: (000) 000-0000
ARTICLE 13
GOVERNING LAW; JURISDICTION; JUDGMENT CURRENCY
----------------------------------------------
13.1 Governing Law
-------------
This Agreement and the Letter of Offer shall be governed by, and construed in
accordance with, the laws of the Province of Quebec and the laws of Canada
applicable therein.
13.2 Jurisdiction
------------
Any suit, action or proceeding against the Borrower in relation to any matter
arising out of this Agreement, the Notes, the Letter of Offer, the Security
Documents or the Credit Facilities or any judgment entered by any court in
respect thereof may be brought in the courts of the Province of Quebec or in any
other court of competent jurisdiction as the Lender in its sole discretion may
elect and the Borrower hereby submits to the non-exclusive jurisdiction of such
courts for the purposes of any such suit, action or proceeding.
-39-
13.3 Judgment Currency
-----------------
13.3.1 If for any purpose, including the obtaining of judgment in any court,
it is necessary to convert a sum due hereunder, under the letter of
Offer or pursuant to any Note or any of the Credit Facilities from the
currency in which it is payable ("the PAYMENT CURRENCY") into another
currency (the "JUDGMENT CURRENCY"), the parties hereto agree, to the
fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which, in accordance with normal
banking procedures, the Lender could purchase the Payment Currency
with the Judgment Currency in the New York foreign exchange market on
the Business Day preceding the date of final judgment.
13.3.2 The obligation of the Borrower in respect of any sum due from it to
the Lender hereunder, under the Letter of Offer or pursuant to any
Note or any of the Credit Facilities shall, notwithstanding any
judgment or payment in a currency other than the Payment Currency, be
discharged only to the extent that on the Business Day following
receipt by the Lender of any sum so paid or adjudged to be so due in
the Judgment Currency the Lender may in accordance with normal banking
procedures, purchase the Payment Currency with the amount of the
Judgment Currency so paid or adjudged to be due; if the amount in the
Payment Currency so purchased is less than the sum originally due to
the Lender in the Payment Currency, the Borrower agrees, as a separate
obligation and additional cause of action and notwithstanding any such
payment or judgment, to indemnify the Lender against such loss and if
the amount in the Payment Currency so purchased exceeds the sum
originally due to the Lender in the Payment Currency, the Lender
agrees to remit to the Borrower such excess.
13.3.3 The term "RATE OF EXCHANGE" in this Section 13.3 means the spot rate
at which the Lender, in accordance with normal practices, is able on
the relevant date to purchase the Payment Currency with the Judgment
Currency and includes any premium and costs of exchange payable in
connection with the purchase.
-40-
ARTICLE 14
SUCCESSORS AND ASSIGNS
----------------------
14.1 Sale, Assignment, Transfer or Grant of Interest
-----------------------------------------------
14.1.1 The Borrower shall not sell, assign or transfer its rights or
obligations under this Agreement, the Notes, the Letter of Offer, the
Credit Facilities or any Security Documents or any interest therein,
nor shall it amalgamate, consolidate or merge with any other Person
without the prior written consent of the Lender.
14.1.2 At any time and from time to time the Lender may sell, assign,
transfer or grant an interest to any financial institution, or may
enter into a participation agreement with any financial institution
with respect to, all or any part of, or any interest in, the Lender's
rights, benefits or obligations hereunder and under the Letter of
Offer, the Notes and any Security Documents and, in the event of such
a sale, assignment, transfer, grant or participation and to the extent
thereof, such purchaser, assignee, transferee, grantee or participant
shall have the same rights and benefits against the Borrower as it
would have had if it were a Party of the First Part and a Lender
hereunder. The Borrower and the Lender agree to consent to any
amendments hereto which may be required to give effect to such sale,
assignment, transfer, grant or participation provided that no
additional liability hereunder will be incurred by any party hereto by
reason of such amendment.
14.2 Successors and Assigns
----------------------
This Agreement when executed and delivered by the parties hereto shall be
binding upon, and inure to the benefit of, the Borrower, the Lender and their
respective successors and assigns.
-41-
ARTICLE 15
MISCELLANEOUS
-------------
15.1 Severability
------------
Any provision of this Agreement which is or becomes prohibited or unenforceable
in any jurisdiction shall not invalidate, affect or impair the remaining
provisions hereof and any such prohibition or unenforceability in any
jurisdiction does not invalidate or render unenforceable any such provision in
any other jurisdiction.
15.2 Survival of Representations
---------------------------
The representations and warranties made in or pursuant to this Agreement shall
survive the execution and delivery of this Agreement and continue in full force
and effect until the full payment and performance of all obligations of the
Borrower hereunder or pursuant hereto.
15.3 Amendments, Waivers, Etc.
------------------------
No amendment, modification or waiver of any provision of, and no waiver of the
strict observance, performance or compliance by the Borrower with any term,
covenant, condition or agreement contained in, this Agreement, the Notes, the
Letter of Offer or the Security Documents or any other security the Lender may
from time to time hold as security for the performance by the Borrower of its
obligations hereunder or thereunder and no indulgence granted by the Lender or
consent to any departure by the Borrower therefrom, shall in any event be
effective unless it shall be in writing and signed by the Lender and the
Borrower, and then such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it is given.
15.4 Term of Agreement
-----------------
This Agreement shall continue in full force and effect until both the Credit
Facilities have terminated and all indebtedness of the Borrower under or
pursuant to this Agreement, the Letter of Offer and the Credit Facilities have
been indefeasibly paid and satisfied in full.
-42-
15.5 Execution in Counterparts
-------------------------
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
15.6 Not an Adhesion Contract
------------------------
The Borrower confirms that this Agreement is not an adhesion contract and that
the terms and conditions hereof have been freely negotiated with the Lender.
15.7 Conflict
--------
In the case of any inconsistencies between the provisions of this Agreement and
the provisions of the Letter of Offer, the provisions of this Agreement shall
govern to the extent of such inconsistency.
15.8 New Legislation
---------------
The Borrower shall sign all documents or confirmations which the Lender may
reasonably request as a result of the introduction of new legislation, including
without limitation the coming into force of the new Civil Code of Quebec, for
the purpose of confirming, perfecting or granting the security granted or
intended to be granted pursuant to the Security Documents or confirming the
rights, title and interests of the Lender under this Agreement and/or the Letter
of Offer.
15.9 Foreign Exchange Future Contracts
---------------------------------
The Borrower hereby confirms and recognizes that amounts owing from time to time
under any foreign exchange future contract entered into between the Borrower and
the Lender shall be secured under the Security Documents.
-43-
15.10 Death of Guarantor
------------------
If a Guarantor dies, the Lender shall have the right to immediately reduce the
authorized amount of any of its Credit Facilities by an amount equal to the
aggregate principal amount of all guarantees signed by such Guarantor whether
for the indebtedness of the Borrower or another Guarantor.
15.11 Language
--------
The parties hereby confirm their express wish that the present Agreement and all
documents and agreements directly and indirectly related thereto, including
notices, be drawn up in English. Notwithstanding such express wish, the parties
agree that any of such documents, agreements and notices or any part thereof or
of this Agreement may be drawn up in French. Les parties reconnaissent leur
volonte expresse que la presente convention ainsi que tous les documents et
conventions qui s'y rattachent directement ou indirectement, y compris xxx xxxx,
soient rediges en langue anglaise. Nonobstant telle volonte expresse, les
parties conviennent que n'importe quel desdits documents, conventions et avis ou
toute partie de ceux-ci ou de cette convention puissent etre rediges en langue
francaise.
15.12 Formal Date
-----------
For the purposes of convenience this Agreement may be referred to as bearing
formal date of February 25, 1994 irrespective of the actual date of execution.
-44-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective representatives thereunto duly authorized as of the date
first above written.
BANK OF MONTREAL
by: [SIGNATURE APPEARS HERE]
------------------------------
POLYMERES XXXXX, LTEE
XXXXX POLYMERS, LTD.
by: [SIGNATURE APPEARS HERE]
------------------------------
by: [SIGNATURE APPEARS HERE]
------------------------------
EXHIBIT A TO THE AGREEMENT RESPECTING A TERM LOAN AND OTHER CREDIT FACILITIES
BEARING FORMAL DATE OF FEBRUARY 25, 0000 XXXXXXX XXXX XX XXXXXXXX AND POLYMERES
XXXXX, LTEE- XXXXX POLYMERS, LTD.
[DESCRIPTION OF LANDS]
An emplacement fronting on Xxxxx Xxxxxx Avenue in the Town of Baie
d'Urfe, known and designated as the subdivision lot number FOURTEEN of
the original lot number THREE HUNDRED AND TWENTY-SIX (326-14) upon the
official plan and book of reference of the Parish of Sainte-Xxxx,
Registration Division of Montreal
together with all buildings, construction and immoveable property now
or hereafter located thereon or therein including without limitation
the building known as 00000 Xxxxx Xxxxxx Xxxxxx in the said Town;
EXHIBIT B TO THE AGREEMENT RESPECTING A TERM LOAN AND OTHER CREDIT FACILITIES
BEARING FORMAL DATE OF FEBRUARY 25, 0000 XXXXXXX XXXX XX XXXXXXXX AND POLYMERES
XXXXX, LTEE XXXXX POLYMERS, LTD.
[DESCRIPTION OF MATERIAL CONTRACTS]
(1) Letter Agreement dated September 10, 1993 between Xxxxxxx
Xxxxxxxxxx and Chevron Chemical Company;
(2) Styrene Monomer Sales Contract dated as of February 25, 1994 by
and among Chevron Chemical Company and SP Acquisition Co., Xxxxx
Polymers, Inc. and the Borrower;
(3) Letter Agreement dated November 4, 1993 between Xxxxxxx
Xxxxxxxxxx and Xxxxx River Corporation;
(4) Supply Agreement dated as of December 23, 1993 by and between
Xxxxxxx Xxxxxxxxxx and Xxxxx River Corporation.
[LETTERHEAD OF BANQUE DE MONTREAL]
Xxx xx 4 1995
StyroChem International Ltd
00000 Xxxxx Xxxxxx
Xxxx x'Xxxx Xxxxxx
X0X 0X0
Attention Mme Xxxxxxxxx Xxxxxxxxxx
Xxxxx Xxxxxxxxx,
Tel que discute lors de notre conversation telephonique
d'aujourd'hui, nous confirmons que la disponibilite du credit d'exploitation de
$2,000,000. a ete augmentee a $2,500,000. sujet aux conditions deja en place. De
plus le maximum anterieurement autorise pour depenses en immobilisation a ete
augmente de $1,920,000. a $2,120,000.
Esperant le tout a votre satisfaction, nous demeurons
Bien a vous
/s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx
Directeur principal
UNOFFICIAL TRANSLATION
----------------------
BANK OF MONTREAL
Kirkland
0000 Xx-Xxxxxxx Xxxx.
Xxxxxxxx, Xxxxxx
X0X 0X0
Telephone No.: 000-0000
Telecopier No.: 694-4411
May 4, 1995
StyroChem International Ltd.
00000 Xxxxx Xxxxxx
Xxxx x'Xxxx, Xxxxxx
X0X 0X0
Attention: Xxx. Xxxxxxxxx Xxxxxxxxxx
------------------------------------
Dear Xxxxxxxxx;
As discussed during our telephone conversation of today, we confirm
that the available operating credit has been increased from $2,000,000.00 to
$2,500,000 subject to the same conditions. Furthermore, the maximum authorized
amount for capital expenditures has been increased from $1,920,000 to
$2,120,000.
Hoping the whole to be satisfactory, we remain,
Yours very truly,
Xxxx Xxxxxxx
Principal Manager
[LETTERHEAD OF BANQUE DE MONTREAL]
November 20th 1996
Xx. Xxxxxxxxx Xxxxxxxx
Senior Vice-President and Treasurer
Radnor Holding Corporation
3 Xxxxxx Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxxxxxxxx
00000
Dear Xx Xxxxxxxx
ACQUISITION OF STYROCHEM INTERNATIONAL LTD
------------------------------------------
As recently discussed, we enclosed copy of a letter with terms and
conditions for the renewal of credit facilities under the name of StyroChem
International Ltd sent to Xx. Xxxxxxx Xxxxxxxxxx. In addition to the above
documentation we enclosed as appendix "A" conditions to be obtained before the
change of ownership of the company. The letter of undertaking mentioned in
appendix "A" has to be prepared on letterhead of StyroChem International Ltd and
countersign by Radnor Holding Corporation.
If you have any question please do not hesitate to contact me
Yours Truly
Xxxx Xxxxxxx
StyroChem International Ltd -1- November 19, 1996
Borrower: StyroChem International Ltd
FACILITY
Facility #1 FirstBank Cash Management Account (FCMA) in the amount of
$2,500,000 subject to terms and conditions as outlined herein.
Bank of Montreal Prime Rate plus one percent per annum (i.e.
Prime + 1.000%) floating, accrued from day to day, calculated and
payable monthly in arrears based on a calender year.
A monthly fee of $280 is payable (subject to review and
adjustment annually by the Bank).
Under this facility the borrower has the following option(s)
within the global amount of the facility described above:
Demand Loan revolving U.S funds in canadian dollars equivalent
with role over by multiple of $50,000.
Bank of Montreal U.S. Base Rate plus one percent per annum (i.e.
USBR + 1.000%) floating, accrued from day to day, calculated and
payable monthly in arrears based on a calender year.
Commercial Letters of Credit issued and accepted for a total of
$750,000 canadian dollars equivalent not to be used to
guaranteeing obligations to third parties and for a maximum of 12
months.
Commission: Standard
Foreign Exchange Foward Contract up to $500,000. (10% of
$5,000,000) for a term not to exceed 12 months.
Commission: Standard
Facility #2 Fixed Rate Term Loan in the amount of $731,250. (original amount
was $1,300,000.) Loan is repayable over 16 quarterly payments of
$81,250 principal plus interest, calculated on a calendar year
basis. Last payment will be November 30th 1998.
Bank of Montreal Prime Rate plus one point fifty percent per
annum (i.e. Prime + 1.5000%) floating, accrued from day to day,
calculated and payable monthly in arrears based on a calender
year.
StyroChem International Ltd -2- November 19, 1996
Repayment: 100% of net cash proceeds from the permitted sale/sale-
---------
leaseback of any fixed asset of the Borrower shall applied, in reverse
order relative to maturity, to the prepayment under the facility #2 to
the extend not reinvested in replacement assets.
Optional Prepayment: Prepayments from internal cash flow(CFADS)
-------------------
including the permitted sale/sale-leaseback of any asset of the
Borrower as outlined in scheduled repayments, or from further equity
issues, will be permitted on facility 2 in inverse order of maturity
without penalty. A fee of 3 months interest will apply on the amount
prepaid in the case of all other prepayments of facility 2.
Prime Rate and US Base Rate:
"Prime Rate" and "US Base Rate" means the floating annual rate of
interest established from time to time by the Bank of Montreal as the
reference rate it will use to determine rates of interest on Canadian
dollar loans, and U.S. dollar loans to borrowers in Canada.
TERM AND PREPAYMENT:
The demand facility shall revolve, and may be terminated in whole or in part and
amounts outstanding thereunder shall be payable in whole or in part upon demand
by the Bank, notwithstanding the payment or nonpayment of principal, interest or
fees by the Borrower or compliance or noncompliance with any undertaking or
covenant given to the Bank herein or elsewhere.
The term loan facility shall be non-revolving and all outstanding principal,
interest and fees accrued in connection therewith shall be due and payable by
the Borrower to the Bank on November 30, 1998 or such earlier date as default
occurs under the applicable loan documentation entered into by the Borrower in
connection therewith.
MARGINS:
The availability of funds under Facility Number 1 is subject to a maximum of:
75% of the Bank's valuation of assigned/hypothecated canadian accounts
receivable, 60% of U.S. accounts receivable after deducting for both can, and
us, all the accounts receivable 60 days or more past due, accounts in dispute,
holdbacks, intercompany accounts, contra accounts and the value of any prior
ranking claim plus 90% of accounts receivable insured by EDC. plus 40% of the
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Bank's valuation of assigned/hypothecated inventory located at the Quebec plan
site (at lower of cost or market) which is free and clear, excluding work in
process, consignment inventory or inventory subject to any prior charge or claim
and 30 day goods. The maximum margin value of inventory is $700,000. Also, a
maximum of 50% of advances are permitted to be margined by inventory.
StyroChem International Ltd -3- November 19, 1996
SECURITY:
Appropriate documentation evidencing corporate authority.
FirstBank Lending Agreement.
Registered Moveable Hypothec on all present and future accounts receivable and
inventory.
Assignment of Inventory via Section 427 of the Bank Act.
Registered Moveable Hypothec (Universality), providing the Bank with a first
charge over all present and future Property.
Registered Moveable Hypothec (Equipment), providing the Bank with a first
charge over all equipments.
An unconditional Guarantee by S. P. Acquisition Ltd of payment of all present
and future debts and liabilities, both direct and indirect, of the Borrower to
the Bank up to the sum of $3,300,000 along with appropriate borrowing
resolutions, solvency certificate and legal opinion.
Registered Collateral Demand Hypothec for $3,300,000 providing a first rank
charge over property located at 19250 Xxxxx Xxxxxx Baie d'Urfe Hypothec of full
covering insurance with standard mortgage clause showing the Bank as loss payee.
Subrogation and Subordination of indebtedness owing by the Borrower to S. P.
Acquisition Co. and a completed pledge to the Bank of the endorsed note
evidencing such indebtedness. $6,200,000 of loans are to be Subrogated.
Subrogation and Subordination of indebtedness owing by the Borrower to StyroChem
International Inc. and a completed pledge to the Bank of the endorsed note
evidencing such indebtedness. $1,125,000. of loans are to be subrogated. This
subrogation is subject to be released or reduced only when the debt/equity
ratio of 1.5:1 will be achieved.
Letter of undertaking to the effect that there will be no dividends, advances,
loans to any individuals or entities without prior Bank consent. The maximum
amount of inter-company charges is limited to $25M per year.
Assignment of EDC Insurance on foreign accounts receivable
Acquisition agreement between Xxxxx Paper Co. and S.P. Acquisition co.
Satisfactory legal opinion pertaining to the validity & efficacity of the
hypothecs and loan agreement.
Environmental audits phase 1 and 11
Environmental chek list.
Solicitors favourable opinion on the collateral demand hypothec
Assignment of fire insurance policy.
StyroChem International Ltd -4- November 19, 1996
Letter of undertaking to subrogate additional funds when required by the Bank in
order to respect covenants.
Moveable hypothec and pledge of 10 shares of the capital stocks of Xxxxx
Polymers
GENERAL CONDITIONS:
The following reports are required;
Quarterly company-prepared financial statements within 45 days of quarter end.
Annual audited financial statements within 120 days of fiscal year end.
MARGIN REPORTING:
Within fifteen (15) business days after the last calendar day of each month and
as at the last business day of such month there shall be delivered to the Bank:
- a certified aged list of outstanding accounts receivable identifying accounts
in dispute, intercompany accounts, contra accounts and the value of any
prior ranking claims.
- a certified valuation of inventory excluding inventory held on a consignment
basis, and identifying all inventory subject to a prior charge or claim in
favour of a creditor other than the Bank.
COVENANTS:
Standard legal covenants included in security documentation required by the
Bank.
In addition the Borrower covenants that:
1) Capital expenditures will not exceed $384,000 in any fiscal year.
2) Its total debt to equity ratio should not exceed 2.0:1 for the year ending
mar/96 and 1.5:1 for the year ending mar/97 and thereafter.
3) It will maintain a minimum working capital ratio of 0.750:1 for year
ending mar/96 and 1.01:1 for year ending mar/97 and thereafter.
4) It will maintain a minimum CFADS ratio of 2.0:1 for year ending mar/96 and
2.5:1 for year ending mar/97 and thereafter.
StyroChem International Ltd -5- November 19,1996
EXPENSES:
The borrower will be responsible, in addition to those fees outlined above, for
the following:
All legal, accounting and other professional fees, registry searches and
registration fees for searching, preparing, execution and registration of all
loan and security documentation.
All other costs and out of pocket expenses incurred by the Bank in connection
with the establishment, administration and enforcement of the
Facility/Facilities and the obtaining of applicable security.
An application fee of $3,000 to offset the Bank's cost for further evaluating
your financing request is payable before further evaluation will be conducted.
APPENDIX "A"
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CONDITIONS AND/OR DOCUMENTATIONS TO OBTAINED
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AT TIME NEW OWNERSHIP WILL TAKE OVER OF
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STYROCHEM INTERNATIONAL LTD
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- Favorable bankers reports on Radnor Holding Corporation and WinCup Holding
Inc.
- Letter of undertaking to be obtained from the company and countersigned by
Radnor Holding Corporation to the effect there will be no upstream flow of
funds by way of dividends, bonus, administration fees interest paid on funds
loaned to the subsidiary or any other form for over a maximum of $25,000.
yearly.
- According to section 7.9 of the draft Stock Purchase Agreement, the buyer has
stipulated that a Phase 1 environmental survey and Phase 11 if needed will be
conducted. A copy of these reports are required.
- The "Offering" of senior notes makes mention on page 9 of restrictions to be
imposed on additional credit requirements. Full particulars will be needed to
ensure the account will operate in accordance with the covenants contained in
the indenture.
- Written information and/or documentation explaining the $23.8MM forgiven debts
by Bank of America during year 1995.
